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Section 1: 8-K (8-K)

Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 8‑K

CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): July 24, 2019
First Internet Bancorp
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
 
 
Indiana
(State or Other Jurisdiction of Incorporation)
 
 
 
 
 
001-35750
 
20-3489991
(Commission File Number)
 
(IRS Employer Identification No.)
 
 
 
 
 
11201 USA Parkway
 
46037
Fishers, Indiana
 
(Address of Principal Executive Offices)
 
(Zip Code)
 
 
 
 
 
(317) 532-7900
(Registrant's Telephone Number, Including Area Code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
 
Trading Symbols
 
Name of each exchange on which registered
Common Stock, without par value
 
INBK
 
The Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2026
 
INBKL
 
The Nasdaq Stock Market LLC
6.0% Fixed to Floating Subordinated Notes due 2029
 
INBKZ
 
The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02
Results of Operations and Financial Condition

On July 24, 2019, First Internet Bancorp issued a press release announcing financial results for the quarter ended June 30, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report and is incorporated by reference herein.

Item 9.01
Financial Statements and Exhibits

Number
 
Description
 
Method of filing
 
 
 
 
 
 
 
Furnished herewith









SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
Dated:
July 24, 2019
 
 
 
 
 
 
 
FIRST INTERNET BANCORP
 
 
 
 
 
 
 
By:
/s/ Kenneth J. Lovik
 
 
 
Kenneth J. Lovik, Executive Vice President & Chief Financial Officer



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
398869722_fibancorplogoa52.jpg

First Internet Bancorp Reports Second Quarter 2019 Results

Highlights for the second quarter include:

Diluted earnings per share of $0.60, an increase of 7.1% from the first quarter

Net income of $6.1 million, an increase of 7.5% from the first quarter

Total revenue of $19.6 million, a 5.1% increase from the first quarter driven by increased mortgage banking activity

Significant balance sheet management activities, including $148.4 million of loan sales and sales of $30.6 million of lower-yielding securities


Fishers, Indiana, July 24, 2019 - First Internet Bancorp (the “Company”) (Nasdaq: INBK), the parent company of First Internet Bank (the “Bank”), announced today financial and operational results for the second quarter of 2019. Net income for the second quarter of 2019 was $6.1 million, or $0.60 diluted earnings per share. This compares to net income of $5.7 million, or $0.56 diluted earnings per share, for the first quarter of 2019, and net income of $6.0 million, or $0.67 diluted earnings per share, for the second quarter of 2018.

David Becker, Chairman, President and Chief Executive Officer, commented, “We are excited about the earnings results for the quarter, driven by solid top line revenue growth. Our lending teams continued to generate a substantial amount of new originations, with single tenant lease financing and healthcare finance leading the way. Additionally, our direct-to-consumer mortgage business had a terrific quarter, posting a 65% linked-quarter increase in revenue.

“We have made tremendous progress with our expansion into small business banking. The pipeline of new lending opportunities grew significantly during the second quarter. Furthermore, our efforts on the deposit side also began to produce results as business money market accounts provided over $34 million in new balances.

“We also delivered on our balance sheet management strategies, which included sales of lower-yielding seasoned loans and securities. In addition to helping manage our capital, these moves allowed our businesses to maintain their origination momentum. We expect to deploy the liquidity provided by these transactions, several of which closed late in the quarter, into higher-yielding new loan originations.

Mr. Becker concluded, “The high level of engagement from our team members throughout the organization remains the key to our success. We are proud of the strong culture and workplace environment we have created, which was recognized yet again during the quarter as we placed first for medium-sized companies on The Indianapolis Star’s annual “Top Workplaces in Central Indiana” list and, for the second consecutive year, won a special award for company leadership. I am very proud of the team we have assembled, and I thank them for their dedication.”




Net Interest Income and Net Interest Margin
Net interest income for the second quarter of 2019 was $16.1 million, compared to $16.2 million for the first quarter of 2019, and $15.5 million for the second quarter of 2018. On a fully-taxable equivalent basis, net interest income for the second quarter of 2019 was $17.7 million, compared to $17.8 million for the first quarter of 2019, and $16.6 million for the second quarter of 2018.

Total interest income for the second quarter of 2019 was $36.8 million, an increase of 5.3%, compared to the first quarter of 2019, and an increase of 34.4% compared to the second quarter of 2018. On a fully-taxable equivalent basis, total interest income for the second quarter of 2019 was $38.5 million, an increase of 5.2% compared to the first quarter of 2019, and an increase of 34.6% compared to the second quarter of 2018. The increase in total interest income compared to the first quarter of 2019 was driven primarily by a $178.6 million, or 5.0%, increase in average interest-earning assets, slightly offset by a 3 basis point decrease in the yield on those assets. The yield on interest-earning assets for the second quarter of 2019 declined to 3.97% from 4.00% in the prior quarter driven primarily by a 3 basis point decrease in the yield on the loan portfolio due mostly to the decline in three month LIBOR during the quarter and, to a lesser extent, lower loan fees.

Total interest expense for the second quarter of 2019 was $20.7 million, an increase of 10.6%, compared to the first quarter of 2019, and an increase of 73.5% compared to the second quarter of 2018. The increase in total interest expense compared to the first quarter of 2019 was driven primarily by a $114.5 million increase in average certificates and brokered deposit balances, combined with the effect of a 12 basis point increase in the cost of funds related to those deposits. While rates paid on new certificates of deposits production continued to decline during the second quarter of 2019, the overall cost of deposit funding increased as new production rates outweighed the costs of maturing certificates of deposits. Overall, the total cost of interest-bearing liabilities increased 10 basis points from the first quarter of 2019.

Net interest margin (“NIM”) declined 13 basis points to 1.73% for the second quarter of 2019, compared to 1.86% for the first quarter of 2019 and 2.17% for the second quarter of 2018. On a fully-taxable equivalent basis, NIM also decreased 13 basis points to 1.91% for the second quarter of 2019, from 2.04% for the first quarter of 2019 and 2.33% for the second quarter of 2018.

Noninterest Income
Noninterest income for the second quarter of 2019 was $3.5 million, compared to $2.4 million for the first quarter of 2019 and $2.2 million for the second quarter of 2018. The increase compared to the first quarter of 2019 was driven primarily by an increase in revenue from mortgage banking activities and other noninterest income, which was partially offset by loss on sale of securities. The increase in mortgage banking revenue of $1.0 million, or 64.7%, was due mainly to an increase in mandatory pipeline volumes as the decline in mortgage interest rates during the quarter drove increased interest rate lock commitment activity. The increase in other noninterest income was due primarily to the Company recognizing a $0.5 million gain on the sale of its ownership of Visa Class B shares. The $0.5 million loss on sale of securities during the second quarter of 2019 resulted from the Company selling lower-yielding mortgage backed and U.S. Government Agency securities with a book value of $30.6 million.

The Company sold loans with a book value of $148.4 million during the second quarter of 2019, recognizing a net $66,000 loss on the transactions. Gains recognized on the sale of single tenant lease financing loans were offset by losses on the sales of portfolio residential mortgages, which included fixed rate and seasoned lower-yielding adjustable rate loans. Additionally, public finance loans were sold at approximately book value. When including the impact of the loss on sale of securities and the gain realized on the sale of the Visa Class B shares, both discussed above, the net impact of these balance sheet management activities on the Company’s results of operations was a gain of $17,000.




Noninterest Expense
Noninterest expense for the second quarter of 2019 was $11.7 million, compared to $11.1 million for the first quarter of 2019 and $10.2 million for the second quarter of 2018. The increase from the first quarter of 2019 was due primarily to higher salaries and employee benefits and deposit insurance premiums. The increase in salaries and employee benefits was driven mainly by higher incentive compensation related to the increased mortgage production and a full quarter’s impact of employee merit compensation increases that were effective late in the first quarter of 2019.

Income Taxes
The Company reported income tax expense of $0.3 million and an effective tax rate of 5.3% for the second quarter of 2019, compared to $0.5 million and an effective tax rate of 8.5% for the first quarter of 2019 and $0.8 million and an effective tax rate of 11.5% for the second quarter of 2018. Income tax expense for the first quarter of 2019 included $0.1 million of expense associated with annual equity compensation vesting events which did not recur in the second quarter of 2019.

Loans and Credit Quality
Total loans as of June 30, 2019 were $2.9 billion, an increase of $21.2 million, or 0.7%, compared to March 31, 2019, and an increase of $487.1 million, or 20.5%, compared to June 30, 2018. Total commercial loan balances were $2.2 billion as of June 30, 2019, an increase of $86.3 million, or 4.1%, compared to March 31, 2019 and an increase of $440.7 million, or 25.3%, compared to June 30, 2018. Compared to the linked quarter, the growth in commercial loan balances was driven largely by production in healthcare finance and single tenant lease financing, partially offset by the sale of $30.9 million of single tenant lease financing loans and $22.4 million of public finance loans.

Total consumer loan balances were $639.8 million as of June 30, 2019, a decrease of $78.2 million, or 10.9%, compared to March 31, 2019, and an increase of $13.6 million, or 2.2%, compared to June 30, 2018. Compared to the linked quarter, the decline in consumer loan balances was driven primarily by the sale of $95.2 million of portfolio residential mortgage loans, partially offset by new originations in the recreational vehicles and trailers portfolios.

Total delinquencies 30 days or more past due were 0.24% of total loans as of June 30, 2019, compared to 0.18% as of March 31, 2019 and 0.03% as of June 30, 2018. Nonperforming loans to total loans increased to 0.19% as of June 30, 2019, compared to 0.12% at March 31, 2019 and 0.01% at June 30, 2018. Compared to the linked quarter, the increase in both delinquencies and nonperforming loans was due to a commercial loan relationship with a total unpaid principal balance of $1.9 million that was placed on nonaccrual status late in the quarter.

The allowance for loan losses as a percentage of total loans was 0.70% as of June 30, 2019, as compared to 0.66% as of March 31, 2019 and 0.68% as of June 30, 2018.

Net charge-offs of $0.3 million were recognized during the second quarter of 2019, resulting in net charge-offs to average loans of 0.04%, as compared to 0.05% in the first quarter of 2019 and 0.03% in the second quarter of 2018. The provision for loan losses in the second quarter of 2019 was $1.4 million, compared to $1.3 million for the first quarter of 2019 and $0.7 million for the second quarter of 2018. The increase in the provision for loan losses compared to the first quarter of 2019 was driven primarily by a specific reserve of $0.6 million recognized on the commercial loan relationship discussed above, partially offset by the impact of selling $148.4 million of loans during the quarter.

Balance Sheet Management
In the fourth quarter of 2017, when interest rates were forecasted to increase, the Company initiated an asset hedging strategy to enhance asset sensitivity and reduce long term interest rate risk. As of June 30, 2019, the Company had a total notional value of $435.5 million of pay fixed / receive variable interest rate swaps in place to hedge public finance loans, representing 61.7% of the total public finance loan balances outstanding. Including $88.2 million of notional value interest rate swaps in place to hedge



investment securities, the Company had swaps with a total notional value of $523.7 million in place at the end of the second quarter of 2019 to hedge long-term fixed rate assets.

The Company also implemented a liability hedging strategy using pay fixed / receive variable interest rate swaps to extend the duration of short term FHLB advances and brokered variable rate money market deposits. As of June 30, 2019, the Company had $210.0 million of notional value interest rate swaps related to these funding sources.

Based on the declining interest rate environment during the first six months of 2019, the Company did not execute any additional interest rate swaps to hedge either assets or liabilities. In future periods, the Company’s use of interest rate swaps as a tool to manage exposure to both short- and long-term interest rate risk will be determined based on multiple factors, including, but not limited to, the interest rate environment and forward rate expectations.

In conjunction with the decline in interest rates throughout 2019, the Company has reduced rates offered on certificates of deposits in the institutional and public funds channels between 55 and 101 basis points, based on the maturity, and between 15 and 47 basis points for consumer certificates of deposits. To further protect earnings and profitability from the negative impact of declining interest rates, the Company has implemented price floors for new originations in most of its commercial lending areas.

The Company may also use loan sales or reposition the securities and wholesale funding portfolios to manage balance sheet growth and capital, provide liquidity and help improve NIM and profitability. As discussed above, during the second quarter, the Company sold $148.4 million of loans during the quarter, which included seasoned lower-yielding adjustable rate residential mortgage and public finance loans. The Company also sold $30.6 million of lower-yielding securities to improve the overall yield and shorten duration in the investment portfolio. Additionally, the Company refinanced $55.0 million of FHLB advances which resulted in savings of 34 basis points related to these borrowings.

Capital
As of June 30, 2019, total shareholders’ equity was $296.1 million, an increase of $2.1 million, or 0.7%, compared to March 31, 2019, due mainly to the net income earned during the quarter but partially offset by the impact of common stock repurchased during the quarter and an increase in accumulated other comprehensive loss. Book value per common share increased to $29.56 as of June 30, 2019, up from $29.03 as of March 31, 2019 and $27.71 as of June 30, 2018. Tangible book value per common share increased to $29.10, up from $28.57 and $27.25, each as of the same reference dates.

In connection with its previously announced stock repurchase program, the Company repurchased 112,129 shares during the second quarter of 2019 at an average price of $21.28 per share. Subsequent to quarter-end, the Company has repurchased an additional 37,862 shares at an average price of $20.75 per share through July 23. Since inception of the program, share repurchases have totaled 246,174 at an average price of $20.86 per share.




The following table presents the Company’s and the Bank’s regulatory and other capital ratios as of June 30, 2019.
 
 
As of June 30, 2019
 
 
Company
 
Bank
 
 
 
 
 
Total shareholders’ equity to assets
 
7.48%
 
7.93%
Tangible common equity to tangible assets 1
 
7.37%
 
7.82%
Tier 1 leverage ratio 2
 
8.06%
 
8.53%
Common equity tier 1 capital ratio 2
 
11.08%
 
11.73%
Tier 1 capital ratio 2
 
11.08%
 
11.73%
Total risk-based capital ratio 2
 
14.31%
 
12.46%
 
 
 
 
 
1 This information represents a non-GAAP financial measure. For a discussion of non-GAAP financial measures, see the section below entitled "Non-GAAP Financial Measures."
2 Regulatory capital ratios are preliminary pending filing of the Company's and the Bank's regulatory reports.

Conference Call and Webcast
The Company will host a conference call and webcast at 12:00 p.m. Eastern Time on Thursday, July 25, 2019 to discuss its quarterly financial results. The call can be accessed via telephone at (888) 317-6016. A recorded replay can be accessed through August 25, 2019 by dialing (877) 344-7529; passcode: 10130514.
Additionally, interested parties can listen to a live webcast of the call on Company's website at www.firstinternetbancorp.com. An archived version of the webcast will be available in the same location shortly after the live call has ended.

About First Internet Bancorp
First Internet Bancorp is a bank holding company with assets of $4.0 billion as of June 30, 2019. The Company’s subsidiary, First Internet Bank, opened for business in 1999 as an industry pioneer in the branchless delivery of banking services. The Bank provides consumer and small business deposit, consumer loan, residential mortgage, and specialty finance services nationally as well as commercial real estate loans, commercial and industrial loans, SBA financing and treasury management services. First Internet Bancorp’s common stock trades on the Nasdaq Global Select Market under the symbol “INBK” and is a component of the Russell 2000® Index. Additional information about the Company is available at www.firstinternetbancorp.com and additional information about the Bank, including its products and services, is available at www.firstib.com.

Forward-Looking Statements
This press release may contain forward-looking statements with respect to the financial condition, results of operations, trends in lending policies, plans, objectives, future performance or business of the Company. Forward-looking statements are generally identifiable by the use of words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “pending,” “plan,” “preliminary,” “remain,” “should,” “will,” “would” or other similar expressions. Forward-looking statements are not a guarantee of future performance or results, are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from the information in the forward-looking statements. Factors that may cause such differences include: failures or breaches of or interruptions in the communications and information systems on which we rely to conduct our business; failure of our plans to grow our commercial real estate, commercial and industrial, public finance and healthcare finance loan portfolios; competition with national, regional and community financial institutions; the loss of any key members of senior management; fluctuations in interest rates; general economic conditions; risks relating to the regulation of financial institutions; failure to close any pending acquisitions; and other factors identified in reports we file with the U.S. Securities and Exchange Commission. All statements in this press release, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.




Non-GAAP Financial Measures
This press release contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles (“GAAP”). Non-GAAP financial measures, specifically tangible common equity, tangible assets, tangible book value per common share, tangible common equity to tangible assets, average tangible common equity, return on average tangible common equity, total interest income - FTE, net interest income - FTE and net interest margin - FTE are used by the Company’s management to measure the strength of its capital and analyze profitability, including its ability to generate earnings on tangible capital invested by its shareholders. Although management believes these non-GAAP measures are useful to investors by providing a greater understanding of its business, they should not be considered a substitute for financial measures determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are included in the table at the end of this release under the caption “Reconciliation of Non-GAAP Financial Measures.”


Contact Information:
 
 
 
Investors/Analysts
 
Media
 
Paula Deemer
 
Nicole Lorch
 
Investor Relations
 
Executive Vice President & Chief Operating Officer
(317) 428-4628
 
(317) 532-7906
 
investors@firstib.com
 
nlorch@firstib.com
 




First Internet Bancorp
 
 
 
 
 
 
 
Summary Financial Information (unaudited)
 
 
 
 
 
 
Dollar amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
Net income
 
$
6,121

 
$
5,696

 
$
6,008

 
$
11,817

 
$
12,036

 
 
 
 
 
 
 
 
 
 
 
Per share and share information
 
 
 
 
 
 
 
 
 
 
Earnings per share - basic
 
$
0.60

 
$
0.56

 
$
0.67

 
$
1.16

 
$
1.38

Earnings per share - diluted
 
0.60

 
0.56

 
0.67

 
1.16

 
1.38

Dividends declared per share
 
0.06

 
0.06

 
0.06

 
0.12

 
0.12

Book value per common share
 
29.56

 
29.03

 
27.71

 
29.56

 
27.71

Tangible book value per common share 1
 
29.10

 
28.57

 
27.25

 
29.10

 
27.25

Common shares outstanding
 
10,016,458

 
10,128,587

 
10,181,675

 
10,016,458

 
10,181,675

Average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
Basic
 
10,148,285

 
10,217,637

 
8,909,913

 
10,182,770

 
8,705,689

Diluted
 
10,148,285

 
10,230,531

 
8,919,460

 
10,186,833

 
8,731,331

Performance ratios
 
 
 
 
 
 
 
 
 
 
Return on average assets
 
0.65
%
 
0.64
%
 
0.82
%
 
0.64
%
 
0.84
%
Return on average shareholders' equity
 
8.26
%
 
7.91
%
 
10.11
%
 
8.09
%
 
10.51
%
Return on average tangible common equity 1
 
8.39
%
 
8.04
%
 
10.31
%
 
8.22
%
 
10.73
%
Net interest margin
 
1.73
%
 
1.86
%
 
2.17
%
 
1.79
%
 
2.22
%
Net interest margin - FTE 1,2
 
1.91
%
 
2.04
%
 
2.33
%
 
1.97
%
 
2.37
%
Capital ratios 3
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets
 
7.48
%
 
8.01
%
 
9.05
%
 
7.48
%
 
9.05
%
Tangible common equity to tangible assets 1
 
7.37
%
 
7.89
%
 
8.92
%
 
7.37
%
 
8.92
%
Tier 1 leverage ratio
 
8.06
%
 
8.34
%
 
9.93
%
 
8.06
%
 
9.93
%
Common equity tier 1 capital ratio
 
11.08
%
 
11.66
%
 
13.54
%
 
11.08
%
 
13.54
%
Tier 1 capital ratio
 
11.08
%
 
11.66
%
 
13.54
%
 
11.08
%
 
13.54
%
Total risk-based capital ratio
 
14.31
%
 
13.68
%
 
15.85
%
 
14.31
%
 
15.85
%
Asset quality
 
 
 
 
 
 
 
 
 
 
Nonperforming loans
 
$
5,386

 
$
3,432

 
$
285

 
$
5,386

 
$
285

Nonperforming assets
 
8,041

 
6,071

 
5,335

 
8,041

 
5,335

Nonperforming loans to loans
 
0.19%

 
0.12
%
 
0.01
%
 
0.19
%
 
0.01
%
Nonperforming assets to total assets
 
0.20%

 
0.17
%
 
0.17
%
 
0.20
%
 
0.17
%
Allowance for loan losses to:
 
 
 
 
 
 
 
 
 
 
Loans
 
0.70%

 
0.66
%
 
0.68
%
 
0.70
%
 
0.68
%
Nonperforming loans
 
370.9%

 
549.0
%
 
5,632.6
%
 
370.9
%
 
5,632.6
%
Net charge-offs to average loans
 
0.04%

 
0.05
%
 
0.03
%
 
0.04
%
 
0.04
%
Average balance sheet information
 
 
 
 
 
 
 
 
 
 
Loans
 
$
2,889,478

 
$
2,760,164

 
$
2,278,415

 
$
2,825,178

 
$
2,216,987

Total securities
 
558,352

 
523,265

 
480,713

 
540,905

 
482,931

Other earning assets
 
248,996

 
246,732

 
79,346

 
247,871

 
91,946

Total interest-earning assets
 
3,723,424

 
3,544,849

 
2,856,029

 
3,634,630

 
2,809,583

Total assets
 
3,805,021

 
3,627,508

 
2,921,540

 
3,716,755

 
2,872,935

Noninterest-bearing deposits
 
42,566

 
42,551

 
44,524

 
42,558

 
44,252

Interest-bearing deposits
 
2,879,007

 
2,728,674

 
2,137,045

 
2,804,257

 
2,121,157

Total deposits
 
2,921,573

 
2,771,225

 
2,181,569

 
2,846,815

 
2,165,409

Shareholders' equity
 
297,148

 
291,883

 
238,465

 
294,530

 
230,840


1 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate
3 Regulatory capital ratios are preliminary pending filing of the Company's regulatory reports




First Internet Bancorp
 
 
 
 
 
 
Condensed Consolidated Balance Sheets (unaudited)
Amounts in thousands
 
 
 
 
 
 
 
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
Assets
 
 
 
 
 
 
Cash and due from banks
 
$
5,638

 
$
5,708

 
$
3,694

Interest-bearing deposits
 
342,660

 
124,786

 
138,666

Securities available-for-sale, at fair value
 
522,334

 
520,382

 
460,822

Securities held-to-maturity, at amortized cost
 
35,826

 
31,222

 
19,203

Loans held-for-sale
 
30,642

 
13,706

 
20,672

Loans
 
2,861,156

 
2,839,928

 
2,374,035

Allowance for loan losses
 
(19,976
)
 
(18,841
)
 
(16,053
)
Net loans
 
2,841,180

 
2,821,087

 
2,357,982

Accrued interest receivable
 
18,887

 
17,217

 
14,540

Federal Home Loan Bank of Indianapolis stock
 
25,650

 
23,625

 
22,050

Cash surrender value of bank-owned life insurance
 
36,527

 
36,293

 
35,579

Premises and equipment, net
 
14,405

 
13,737

 
10,169

Goodwill
 
4,687

 
4,687

 
4,687

Other real estate owned
 
2,619

 
2,619

 
5,041

Accrued income and other assets
 
77,774

 
55,107

 
22,668

Total assets
 
$
3,958,829

 
$
3,670,176

 
$
3,115,773

 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
44,040

 
$
45,878

 
$
44,671

Interest-bearing deposits
 
2,962,223

 
2,765,230

 
2,349,613

Total deposits
 
3,006,263

 
2,811,108

 
2,394,284

Advances from Federal Home Loan Bank
 
514,906

 
495,146

 
390,167

Subordinated debt
 
69,375

 
33,911

 
33,800

Accrued interest payable
 
2,930

 
1,549

 
435

Accrued expenses and other liabilities
 
69,235

 
34,449

 
15,000

Total liabilities
 
3,662,709

 
3,376,163

 
2,833,686

Shareholders' equity
 
 
 
 
 
 
Voting common stock
 
224,244

 
226,235

 
227,099

Retained earnings
 
87,454

 
81,946

 
69,066

Accumulated other comprehensive loss
 
(15,578
)
 
(14,168
)
 
(14,078
)
Total shareholders' equity
 
296,120

 
294,013

 
282,087

Total liabilities and shareholders' equity
 
$
3,958,829

 
$
3,670,176

 
$
3,115,773




First Internet Bancorp
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Income (unaudited)
Amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
Interest income
 
 
 
 
 
 
 
 
 
Loans
$
30,842

 
$
29,218

 
$
23,699

 
$
60,060

 
$
45,814

Securities - taxable
3,540

 
3,324

 
2,556

 
6,864

 
5,044

Securities - non-taxable
668

 
684

 
700

 
1,352

 
1,411

Other earning assets
1,794

 
1,773

 
461

 
3,567

 
1,126

Total interest income
36,844

 
34,999

 
27,416

 
71,843

 
53,395

Interest expense
 
 
 
 
 
 
 
 
 
Deposits
17,147

 
15,386

 
9,226

 
32,533

 
17,496

Other borrowed funds
3,592

 
3,369

 
2,729

 
6,961

 
5,023

Total interest expense
20,739

 
18,755

 
11,955

 
39,494

 
22,519

Net interest income
16,105

 
16,244

 
15,461

 
32,349

 
30,876

Provision for loan losses
1,389

 
1,285

 
667

 
2,674

 
1,517

Net interest income after provision
for loan losses
14,716

 
14,959

 
14,794

 
29,675

 
29,359

Noninterest income
 
 
 
 
 
 
 
 
 
Service charges and fees
225

 
236

 
231

 
461

 
461

Mortgage banking activities
2,664

 
1,617

 
1,597

 
4,281

 
3,175

(Loss) gain on sale of loans
(66
)
 
(104
)
 

 
(170
)
 
414

Loss on sale of securities
(458
)
 

 

 
(458
)
 

Other
1,089

 
623

 
349

 
1,712

 
669

Total noninterest income
3,454

 
2,372

 
2,177

 
5,826

 
4,719

Noninterest expense
 
 
 
 
 
 
 
 
 
Salaries and employee benefits
6,642

 
6,321

 
5,827

 
12,963

 
11,732

Marketing, advertising and promotion
466

 
469

 
608

 
935

 
1,324

Consulting and professional fees
835

 
814

 
633

 
1,649

 
1,484

Data processing
328

 
317

 
282

 
645

 
545

Loan expenses
292

 
314

 
260

 
606

 
497

Premises and equipment
1,497

 
1,500

 
1,231

 
2,997

 
2,445

Deposit insurance premium
747

 
555

 
480

 
1,302

 
945

Other
902

 
819

 
861

 
1,721

 
1,427

Total noninterest expense
11,709

 
11,109

 
10,182

 
22,818

 
20,399

Income before income taxes
6,461

 
6,222

 
6,789

 
12,683

 
13,679

Income tax provision
340

 
526

 
781

 
866

 
1,643

Net income
$
6,121

 
$
5,696

 
$
6,008

 
$
11,817

 
$
12,036

 
 
 
 
 
 
 
 
 
 
Per common share data
 
 
 
 
 
 
 
 
 
Earnings per share - basic
$
0.60

 
$
0.56

 
$
0.67

 
$
1.16

 
$
1.38

Earnings per share - diluted
$
0.60

 
$
0.56

 
$
0.67

 
$
1.16

 
$
1.38

Dividends declared per share
$
0.06

 
$
0.06

 
$
0.06

 
$
0.12

 
$
0.12


All periods presented have been reclassified to conform to the current period classification



First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average Balances and Rates (unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dollar amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended

June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held-for-sale 1
$
2,916,076

 
$
30,842

 
4.24%
 
$
2,774,852

 
$
29,218

 
4.27
%
 
$
2,295,970

 
$
23,699

 
4.14
%
Securities - taxable
460,816

 
3,540

 
3.08%
 
429,020

 
3,324

 
3.14
%
 
386,207

 
2,556

 
2.65
%
Securities - non-taxable
97,536

 
668

 
2.75%
 
94,245

 
684

 
2.94
%
 
94,506

 
700

 
2.97
%
Other earning assets
248,996

 
1,794

 
2.89%
 
246,732

 
1,773

 
2.91
%
 
79,346

 
461

 
2.33
%
Total interest-earning assets
3,723,424

 
36,844

 
3.97%
 
3,544,849

 
34,999

 
4.00
%
 
2,856,029

 
27,416

 
3.85
%
Allowance for loan losses
(19,275
)
 
 
 
 
 
(18,229
)
 
 
 
 
 
(15,782
)
 
 
 
 
Noninterest-earning assets
100,872

 
 
 
 
 
100,888

 
 
 
 
 
81,293

 
 
 
 
Total assets
$
3,805,021

 
 
 
 
 
$
3,627,508

 
 
 
 
 
$
2,921,540

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
117,665

 
$
214

 
0.73%
 
$
109,453

 
$
212

 
0.79
%
 
$
93,599

 
$
145

 
0.62
%
Savings accounts
37,507

 
106

 
1.13%
 
38,853

 
108

 
1.13
%
 
55,273

 
158

 
1.15
%
Money market accounts
592,106

 
2,995

 
2.03%
 
563,106

 
2,752

 
1.98
%
 
571,398

 
2,130

 
1.50
%
Certificates and brokered deposits
2,131,729

 
13,832

 
2.60%
 
2,017,262

 
12,314

 
2.48
%
 
1,416,775

 
6,793

 
1.92
%
Total interest-bearing deposits
2,879,007

 
17,147

 
2.39%
 
2,728,674

 
15,386

 
2.29
%
 
2,137,045

 
9,226

 
1.73
%
Other borrowed funds
548,932

 
3,592

 
2.62%
 
540,705

 
3,369

 
2.53
%
 
492,068

 
2,729

 
2.22
%
Total interest-bearing liabilities
3,427,939

 
20,739

 
2.43%
 
3,269,379

 
18,755

 
2.33
%
 
2,629,113

 
11,955

 
1.82
%
Noninterest-bearing deposits
42,566

 
 
 
 
 
42,551

 
 
 
 
 
44,524

 
 
 
 
Other noninterest-bearing liabilities
37,368

 
 
 
 
 
23,695

 
 
 
 
 
9,438

 
 
 
 
Total liabilities
3,507,873

 
 
 
 
 
3,335,625

 
 
 
 
 
2,683,075

 
 
 
 
Shareholders' equity
297,148

 
 
 
 
 
291,883

 
 
 
 
 
238,465

 
 
 
 
Total liabilities and shareholders' equity
$
3,805,021

 
 
 
 
 
$
3,627,508

 
 
 
 
 
$
2,921,540

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
16,105

 
 
 
 
 
$
16,244

 
 
 
 
 
$
15,461

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
1.54%
 
 
 
 
 
1.67
%
 
 
 
 
 
2.03
%
Net interest margin
 
 
 
 
1.73%
 
 
 
 
 
1.86
%
 
 
 
 
 
2.17
%
Net interest margin - FTE 2,3
 
 
 
 
1.91%
 
 
 
 
 
2.04
%
 
 
 
 
 
2.33
%

1 Includes nonaccrual loans
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below



First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
 
Average Balances and Rates (unaudited)
 
 
 
 
 
 
 
 
 
 
Dollar amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
Six Months Ended
 
June 30, 2019
 
June 30, 2018
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
 
Average Balance
 
Interest / Dividends
 
Yield / Cost
Assets
 
 
 
 
 
 
 
 
 
 
 
Interest-earning assets
 
 
 
 
 
 
 
 
 
 
 
Loans, including loans held-for-sale 1
$
2,845,854

 
$
60,060

 
4.26
%
 
$
2,234,706

 
$
45,814

 
4.13
%
Securities - taxable
445,006

 
6,864

 
3.11
%
 
387,818

 
5,044

 
2.62
%
Securities - non-taxable
95,899

 
1,352

 
2.84
%
 
95,113

 
1,411

 
2.99
%
Other earning assets
247,871

 
3,567

 
2.90
%
 
91,946

 
1,126

 
2.47
%
Total interest-earning assets
3,634,630

 
71,843

 
3.99
%
 
2,809,583

 
53,395

 
3.83
%
Allowance for loan losses
(18,755
)
 
 
 
 
 
(15,495
)
 
 
 
 
Noninterest-earning assets
100,880

 
 
 
 
 
78,847

 
 
 
 
Total assets
$
3,716,755

 
 
 
 
 
$
2,872,935

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
 
 
 
 
Interest-bearing demand deposits
$
113,582

 
$
427

 
0.76
%
 
$
92,323

 
$
268

 
0.59
%
Savings accounts
38,177

 
213

 
1.13
%
 
55,611

 
316

 
1.15
%
Money market accounts
577,686

 
5,747

 
2.01
%
 
566,897

 
4,022

 
1.43
%
Certificates and brokered deposits
2,074,812

 
26,146

 
2.54
%
 
1,406,326

 
12,890

 
1.85
%
Total interest-bearing deposits
2,804,257

 
32,533

 
2.34
%
 
2,121,157

 
17,496

 
1.66
%
Other borrowed funds
544,841

 
6,961

 
2.58
%
 
467,157

 
5,023

 
2.17
%
Total interest-bearing liabilities
3,349,098

 
39,494

 
2.38
%
 
2,588,314

 
22,519

 
1.75
%
Noninterest-bearing deposits
42,558

 
 
 
 
 
44,252

 
 
 
 
Other noninterest-bearing liabilities
30,569

 
 
 
 
 
9,529

 
 
 
 
Total liabilities
3,422,225

 
 
 
 
 
2,642,095

 
 
 
 
Shareholders' equity
294,530

 
 
 
 
 
230,840

 
 
 
 
Total liabilities and shareholders' equity
$
3,716,755

 
 
 
 
 
$
2,872,935

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
$
32,349

 
 
 
 
 
$
30,876

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest rate spread
 
 
 
 
1.61
%
 
 
 
 
 
2.08
%
Net interest margin
 
 
 
 
1.79
%
 
 
 
 
 
2.22
%
Net interest margin - FTE 2,3
 
 
 
 
1.97
%
 
 
 
 
 
2.37
%

1 Includes nonaccrual loans
2 On a fully-taxable equivalent (“FTE”) basis assuming a 21% tax rate
3 Refer to "Non-GAAP Financial Measures" section above and "Reconciliation of Non-GAAP Financial Measures" below



First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
 
 
Loans and Deposits (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Dollar amounts in thousands
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Commercial loans
 
 
 
 
 
 
 
 
 
 
 
 
Commercial and industrial
 
$
110,143

 
3.8%

 
$
112,146

 
3.9
%
 
$
107,394

 
4.5
%
Owner-occupied commercial real estate
 
83,979

 
2.9%

 
87,482

 
3.1
%
 
86,068

 
3.6
%
Investor commercial real estate
 
21,179

 
0.7%

 
11,188

 
0.4
%
 
6,185

 
0.3
%
Construction
 
47,849

 
1.7%

 
42,319

 
1.5
%
 
46,769

 
2.0
%
Single tenant lease financing
 
1,001,196

 
35.1%

 
975,841

 
34.3
%
 
863,981

 
36.4
%
Public finance
 
706,161

 
24.7%

 
708,816

 
25.0
%
 
566,184

 
23.8
%
Healthcare finance
 
212,351

 
7.4%

 
158,796

 
5.6
%
 
65,605

 
2.8
%
Total commercial loans
 
2,182,858

 
76.3%

 
2,096,588

 
73.8
%
 
1,742,186

 
73.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer loans
 
 
 
 
 
 
 
 
 
 
 
 
Residential mortgage
 
318,678

 
11.1%

 
404,869

 
14.3
%
 
337,143

 
14.2
%
Home equity
 
26,825

 
0.9%

 
27,794

 
1.0
%
 
28,826

 
1.2
%
Trailers
 
144,704

 
5.1%

 
140,548

 
4.9
%
 
120,957

 
5.1
%
Recreational vehicles
 
100,518

 
3.6%

 
95,871

 
3.4
%
 
79,946

 
3.4
%
Other consumer loans
 
49,029

 
1.7%

 
48,840

 
1.7
%
 
59,261

 
2.5
%
Total consumer loans
 
639,754

 
22.4%

 
717,922

 
25.3
%
 
626,133

 
26.4
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Net deferred loan fees, premiums, discounts and other 1
 
38,544

 
1.3%

 
25,418

 
0.9
%
 
5,716

 
0.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
Total loans
 
$
2,861,156

 
100.0%

 
$
2,839,928

 
100.0
%
 
$
2,374,035

 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
June 30, 2019
 
March 31, 2019
 
June 30, 2018
 
 
Amount
 
Percent
 
Amount
 
Percent
 
Amount
 
Percent
Deposits
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest-bearing deposits
 
$
44,040

 
1.5
%
 
$
45,878

 
1.6
%
 
$
44,671

 
1.9
%
Interest-bearing demand deposits
 
126,669

 
4.2
%
 
111,626

 
4.0
%
 
91,748

 
3.8
%
Savings accounts
 
31,445

 
1.0
%
 
41,958

 
1.5
%
 
48,897

 
2.1
%
Money market accounts
 
607,849

 
20.3
%
 
573,895

 
20.4
%
 
582,565

 
24.3
%
Certificates of deposits
 
1,629,886

 
54.2
%
 
1,464,543

 
52.1
%
 
1,231,438

 
51.4
%
Brokered deposits
 
566,374

 
18.8
%
 
573,208

 
20.4
%
 
394,965

 
16.5
%
Total deposits
 
$
3,006,263

 
100.0%

 
$
2,811,108

 
100.0
%
 
$
2,394,284

 
100.0
%

1 Includes carrying value adjustments of $22.5 million, $11.5 million and ($2.5) million as of June 30, 2019, March 31, 2019 and June 30, 2018, respectively, related to interest rate swaps associated with public finance loans.







First Internet Bancorp
 
 
 
 
 
 
 
 
 
 
Reconciliation of Non-GAAP Financial Measures
 
 
 
 
 
 
Dollar amounts in thousands, except per share data
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Six Months Ended
 
 
June 30,
2019
 
March 31,
2019
 
June 30,
2018
 
June 30,
2019
 
June 30,
2018
Total equity - GAAP
 
$
296,120

 
$
294,013

 
$
282,087

 
$
296,120

 
$
282,087

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible common equity
 
$
291,433

 
$
289,326

 
$
277,400

 
$
291,433

 
$
277,400

 
 
 
 
 
 
 
 
 
 
 
Total assets - GAAP
 
$
3,958,829

 
$
3,670,176

 
$
3,115,773

 
$
3,958,829

 
$
3,115,773

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Tangible assets
 
$
3,954,142

 
$
3,665,489

 
$
3,111,086

 
$
3,954,142

 
$
3,111,086

 
 
 
 
 
 
 
 
 
 
 
Common shares outstanding
 
10,016,458

 
10,128,587

 
10,181,675

 
10,016,458

 
10,181,675

 
 
 
 
 
 
 
 
 
 
 
Book value per common share
 
$
29.56

 
$
29.03

 
$
27.71

 
$
29.56

 
$
27.71

Effect of goodwill
 
(0.46
)
 
(0.46
)
 
(0.46
)
 
(0.46
)
 
(0.46
)
Tangible book value per common share
 
$
29.10

 
$
28.57

 
$
27.25

 
$
29.10

 
$
27.25

 
 
 
 
 
 
 
 
 
 
 
Total shareholders' equity to assets
 
7.48
 %
 
8.01
 %
 
9.05
 %
 
7.48
 %
 
9.05
 %
Effect of goodwill
 
(0.11
%)
 
(0.12
%)
 
(0.13
%)
 
(0.11
)%
 
(0.13
)%
Tangible common equity to tangible assets
 
7.37
 %
 
7.89
 %
 
8.92
 %
 
7.37
 %
 
8.92
 %
 
 
 
 
 
 
 
 
 
 
 
Total average equity - GAAP
 
$
297,148

 
$
291,883

 
$
238,465

 
$
294,530

 
$
230,840

Adjustments:
 
 
 
 
 
 
 
 
 
 
           Average goodwill
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
 
(4,687
)
Average tangible common equity
 
$
292,461

 
$
287,196

 
$
233,778

 
$
289,843

 
$
226,153

 
 
 
 
 
 
 
 
 
 
 
Return on average shareholders' equity
 
8.26
 %
 
7.91
 %